PARTNERSHIP Assurance has brought forward one of the biggest London flotations of the year following strong demand for shares in the specialist life insurer.
A source with knowledge of the deal confirmed that it expects to close the order book tomorrow and begin conditional trading on Friday, with demand pushing the valuation towards the higher end of a £1.3bn-£1.6bn range.
The company’s business model involves selling more generous annuities to customers with reduced life expectancy – such as heavy smokers.
However, potential investors told City A.M. that they had questions over the financial strength of the company’s reinsurers in the event that too many clients lived longer than expected. One singled out Pacific Re, even though it enjoys an A+ rating from Fitch, because it is not part of a large group.
Other fund managers have raised concerns about whether bigger players such as Legal & General could clone Partnership’s business model. But the company has previously insisted that 18 years of data collection mean regulators will impose stricter capital requirements on new entrants.
A £1.5bn valuation would reward management who own a fifth of the firm. Chief executive Steve Groves, 38, would alone be worth around £75m.